Question

Situation A: When a $10 per unit tax is imposed on the producer of Bippies (a candy), the equilibrium price increases by $4.Situation B: When a $10 per unit tax is imposed on the producer of Bippies, the equilibrium price increases by $2. Based on the two situations above, Bippies in Situation A has a __________ elastic supply OR has a ________ elastic demand that exists in Situation B.a. more; moreb. more; lessc. less; lessd. less; more

Answer 1

more and less

Step-by-step explanation:

we have 2 situation

Situation A

tax imposed on producer = $10 per unit

so equilibrium price increases = $4

Situation B

tax imposed on producer = $10 per unit

so equilibrium price increases = $2

so we can see here in situation A price increase more by $4 - $2 = $2

so it is very clear that when more elastic supply

or it has less elastic demand of Bippies

so here correct option is b more and less